Part D | Strategic Interaction
// strategic interaction often leads to inefficient markets //Part D pushes beyond market failures to explore situations where markets aren't even the right framework. Here we encounter public goods and common resources—goods that are entirely externalities with no private component. These situations demand a completely different approach: strategic thinking and game theory. You'll discover why cooperation is sometimes impossible even when everyone would benefit, and how understanding these dynamics reveals the hidden logic behind everything from environmental policy to international relations.
Block D1 ~ Common Resources
Common resources create market failures through the tragedy of the commons—when shared resources are overused because private incentives don't align with social benefits.
Episode D1
Introducing non-excludable goods
Chapter 11: Public goods and common resources Reading
Skim the text to understand the main ideas
Homework D1: Friday November 1st Practice Assignment
Unlimited practice. Instant feedback. Submit to Gradescope.
Block D2 ~ Public Goods
Public goods create free-rider problems because they are non-excludable and non-rivalrous, leading to under-provision by private markets and the need for government intervention.
Episode D2
Baby game theory
Chapter 11: Public goods and common resources Reading
Skim the text to understand the main ideas
Homework D2: Due Date TBD Practice Assignment
Unlimited practice. Instant feedback. Submit to Gradescope.
Block D3 ~ Game Theory
Strategic interaction and Nash equilibrium provide a framework for analyzing decisions when outcomes depend on what others do, revealing why cooperation often fails even when it would benefit everyone.
Episode D3
Baby game theory
Reading D3
Skim the text to understand the main ideas
Homework D3: Due Date TBD Practice Assignment
Unlimited practice. Instant feedback. Submit to Gradescope.
Block D4 ~ Voting
Voting systems and collective choice reveal how individual preferences aggregate into social decisions, often leading to paradoxes and inefficiencies in democratic decision-making.
Episode D4
Voting and collective choice
Reading D4
Skim the text to understand the main ideas
Homework D4: Due Date TBD Practice Assignment
Unlimited practice. Instant feedback. Submit to Gradescope.
Extras
Additional content including demos, supplementary videos, and extra materials to deepen your understanding of strategic interaction and public goods.
Veritasium Game Theory
External Video: Veritasium Game Theory - excellent content
Lecture Oct 30 Notes
Class notes and recording from October 30th
Recitations
Come to Recitations prepared to work through extended Vignettes in both small groups and as a class. Your Recitation Instructor will guide you through a less structured economic problem, similar to what was covered in class and what you'll see on the next MiniExam. Submit your work to Gradescope at the end of Recitation.
MiniExam
MiniExam D will be held on Monday November 4th and covers everything in Part D. You will begin to learn that if you understand the concepts and do the work in the Vignettes, Homework, and Demo, you're going to be in good shape on the MiniExam.
